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Running Of Covenants Notes

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Revision: Land



Need to establish whether the covenants entered into by the original parties, can be enforced or against new parties


Between the original parties - the landlord (L) and (T) enter into a contractual relationship, but where either interest is assigned to successors in title, there is no contractual relationship


Law on running of covenants in leases reformed by the Landlord and Tenant (Covenants) Act 1995 (LT(C)A): applied only to new leases (post 1 January 1996) - old leases are still governed by the old laws

Pre January 1996


Privity of Contract o

Original Parties have privity of contract and they remain liable on the lease for the whole term (so original T remains liable after assignment of lease, and original L after assignment of the reversionContinuing liability of original T confirmed in Thursby v PlantContinuing liability of original L confirmed in Stuart v JoyContinuing liability of original parties reinforced by s79 LPA 1925Original liability or original parties resulted in absurdities - why should original parties remain liable when they no longer have the ability to ensure adherence to covenants?Privity of Estate o

Exists between any current landlord and current tenant of the property


So between original L and original T there is both privity of estate and contract because they have a proprietary relationship as well as a contractual one


Upon assignment privity of contract will remain but privity of estate will end - and will exist between the current L and the current T


So enforcement of covenants may be possible beyond the original parties - but privity of estate is not itself sufficient - other conditions must be met

Assignment of the Lease (New T (T1))

1 Revision: Land

[RUNNING OF LEASEHOLD COVENANTS]Following Spencer's Case: there are four requirements for covenants to be enforced by and against an assignee of the lease (T1)

1. There must be privity of estate (as above)

2. A legal lease o

Boyer v Warbey: confirmed that provided the lease complies with the necessary formalities for it to be legal, the covenants will pass under Spencer's Case (doesn't necessarily have to be by deed for short leases)

3. Which has been legally assigned o

The assignment must itself be legal (Cox v Bishop) i.e. by deed and registration


A purely equitable assignment therefore cannot

pass the burden of covenants, but the

benefit of such covenants may be passed under the ordinary rules of contract

4. The covenant must touch and concern the landMust affect the parties in their capacity as L/T and cannot be personalLook to see if the courts have previously ruled on an particular covenant or else take instruction from the judgement of Lord Oliver in P & A Swift v Combined English Stores (adopted in Caerns Motor Services v Texaco)Hua Chiao Commercial Bank v Chiaphua Industries: o

'if it affects the landlord in his normal capacity as landlord or the tenant in his normal capacity as tenant, it may be said to touch and concern the land' (per Lord Oliver)


Here, a covenant to pay a deposit guaranteeing the fulfilment of tenant covenants did NOT touch and concern the landExamples: o

T covenants which touch and concern the land - To pay rent; to repair; to decorate; to insure the premises


L covenants which touch and concern the land - To renew the lease at the end of the term; to supply the premises with water


Covenants which DO NOT touch and concern the land - Not to employ certain persons; to pay the T compensation at the end of the lease if a new lease is not granted 2

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